OK Zimbabwe lifts profit 20%

OK Zimbabwe lifts profit 20%

Picture: THINKSTOCK
HARARE — OK Zimbabwe, which directly competes with TM Supermarkets, in which Pick n Pay has a 49% stake, has posted a 16.3% surge in revenue in the year to end-March, and declared a 40c dividend for the second-half period.

This brings the final dividend for the full-year period to 60c while attributable earnings per share rose 18% to 1.2c.

The company, which said it accessed a further drawdown from a loan facility provided by Investec Africa Frontier Private Equity Fund, said profit for the year grew 20.1% to $12.4m.

Analysts said on Thursday that Zimbabwe’s retail sector was booming, despite problems facing the economy. The country had become a consuming economy, even though the manufacturing and industry base was constrained, they said.

“The stronger performance of the retailers points to an economy consuming more than it is producing, despite the problems that manufacturing and industry sectors are facing,” said Jeffrey Kasirori, an economist.

OK Zimbabwe said most of its stock during the period under review had been imported from South Africa.

But the firm said it was committed to supporting Zimbabwean manufacturers through the Buy Zimbabwe lobby group, which advocates the consumption of locally produced products, as the state prepares new measures to force local companies to procure 50% of goods from local producers.

OK Zimbabwe said South Africa was the major source of imported products and that prices were generally kept stable.

A balanced procurement regime for locally produced and imported goods saw the group maintain “adequate” supplies across its stores during the period under review.

“The increase in overheads was mainly a result of increases in employee benefits, as more employees were engaged to man both the new branch opened during the year and the refurbished branches, to provide … improved facilities and with broadened product offering,” the group said.

It said borrowing costs “increased to $800,000 from $500,000” in the prior year as a convertible loan facility from Investec was accessed, as well as other bank facilities.

OK Zimbabwe is upping its game, lining up further refurbishment programmes for five other stores across the country. It is also planning to open two more shops this year.

Its competitor in the Zimbabwean retail space, TM Supermarkets, has said that it wants a further $25m in order to modernise its stores.

Expansion and refurbishment initiatives during the period under review, however, further drove up operational costs for OK Zimbabwe.